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Ministry cuts Slovakia's GDP forecast to 2.1 percent in 2013

The Finance Ministry has lowered its forecast for economic growth in Slovakia next year - from the 2.6 percent estimate it made in June to the current 2.1 percent, the TASR newswire learned from the ministry's latest updated prognosis on Monday, September 17.

The Finance Ministry has lowered its forecast for economic growth in Slovakia next year - from the 2.6 percent estimate it made in June to the current 2.1 percent, the TASR newswire learned from the ministry's latest updated prognosis on Monday, September 17.

The ministry's Financial Policy Institute (IFP) left the prognosis for 2012 intact at 2.5 percent, however. This is thanks to the country's car plants, whose new export capacities grew in an unexpectedly robust fashion in the first half of the year. Next year will see some reduction in the performance of the economy, however.

"Growth in the economy is being curbed by the deterioration in the prospects of our trading partners. A mild additional effect is also being exerted by the consolidation measures that are needed to squeeze the shortfall in public finances below 3 percent of GDP," said IFP as quoted by TASR. The expected downward impact of the consolidation measures was calculated at 0.5 percentage points.

"Most measures on the income side of the budget will have an effect on corporate profits, investment expenditures and the available income of high-income households. Measures on the expenditures side of the budget make up the remainder of the [consolidation] package, and they will curb the public sector's ordinary expenditures and investments," the Institute wrote.

Uncertainty regarding the debt crisis in the eurozone remains the chief risk associated with the forecast. This uncertainty, coupled with slashed expectations of GDP growth for next year, will also curtail the increase in employment, with the ministry expecting the number of employed to go up by only 0.1 percent, or 1,800 people, in 2013. More pronounced growth in employment levels is foreseen for 2014 - at 0.7 percent.

The unemployment rate, for its part, is projected to stay put at 13.9 percent in 2013, with a gradual drop to 13 percent in 2015. Even though growth in prices is set to be lower in 2013 than in both 2011 and 2012, the ministry has upped its forecast in this regard, particularly due to a faster than expected rise in the prices of foodstuffs. Whereas the inflation rate is expected to reach 3.7 percent this year, 2013 should see a fall to 3.1 percent. In addition, a further drop to around 2 percent is expected in 2014 and 2015.

(Source: TASR)
Compiled by Zuzana Vilikovská from press reports
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